Toronto Income Property Newsletter – January 2017
Happy New Year everybody. May you have a safe and prosperous 2017 and may all your dreams, hopes and aspirations come to fruition.
The Toronto real estate market dominated news headlines in 2016. With average house prices at record high levels, many potential buyers have been shut out of the market. With low inventory levels, low interest rates and persistent high foreign demand the question is how long will this uneven Sellers’ market continue? Can we expect more of the same for 2017?
Can you still buy quality income properties in this real estate market? The answer is a resounding YES. I know because I helped many buyers last year obtain a nice duplex or triplex, some in multiple offers, some not. The secret is to keep your cool, be patient and engage someone like myself who knows what they are doing in this market.
If the property generates enough cash flow to cover itself and has an appreciable cap rate, then it is certainly worth of consideration. I didn’t sell any buildings last year that didn’t make bank – all of my clients are enjoying decent monthly returns. We had to work hard to acquire these properties, but eventually our efforts paid off.
We at Plex Realty really appreciate your business and referrals so if you know of anybody looking to invest in Toronto real estate, please have them contact us to get started. It will be our pleasure to assist in any way we can.
Toronto Income Properties 2016 Wrap-up
Every January as we embark on a new year, I like to look back at income property sales throughout the GTA from the previous year to see where the hot spots were. Here is a summary of activity for income properties for last year.
- In Downtown Toronto C01 (west of Yonge) there were just under 100 sales of properties with 3 or more kitchens. The average price was about $1.6M although this number will have been brought up by some very high priced multiplexes
- The majority of sales were in the Palmerston/Little Italy neighbourhood, followed by Little Portugal and Trinity Bellwoods
- Most of these properties were three-storeys, with an even split between semis and detached
- In Cabbagetown (C08), there were fewer sales (smaller geography) but the average price was slightly higher and the majority of these sales were four-plexes
- There were 40 sales of 3+ units in E01, E02 & E03 (Beaches, Leslieville, Danforth, East York) with the average price hovering over the $1.1M mark
- The top sales in the area (all over $2M) were for huge houses that happened to have a couple of accessory suites, so they weren’t really traditional multiplexes
- In High Park, the Junction and Bloor West Village (W02) there were more sales than on the east side and the average sale price was about $125,000 more
- There were a lot of sales of houses with basement apartments (almost 200), the majority of them being two-story homes in the Dovercourt-Wallace Emerson-Junction neighbourhood. The average sale price was slightly under the triplexes and multiplexes
- The majority of sales of income properties in midtown neighbourhoods were distributed evenly between Humewood/Cedarvale and Mount Pleasant East. The average sale price was about $100K higher than in downtown.
- Avenue Rd fourplexes are easily selling for over $2M now, and even more if they have been renovated and have basement suites.
- There were more detached income property sales than semis
If you would like a more complete synopsis with some of the more interesting income property sales from last year, please let me know and I will send you a link to the actual listings.
Will Sale Prices Rise Even Higher?
So what are the experts predicting? It won't get any easier to buy a home in the Toronto region next year, as the area's housing prices are expected to rise by another 8 per cent in 2017, according to the 2017 Re/Max Outlook Report. That is lower than last year's 17 per cent increase but significantly higher than the 2 per cent national average. In the Toronto area, "we do anticipate decreased affordability next year. We're predicting unit sales will go down (by about 5 per cent), but prices still to go up," the report stated. "We're not predicting a correction next year, but we are predicting a reduction in unit sales and still an increase in price," say leading experts.
I have read other similar articles suggesting that this ride we are on will continue well into 2017. Buckle up folks and get ready for more of the same.